Partner Countries - Indonesia

NAMA in the renewable energy sector

Indonesia has been a partner country of Mitigation Momentum since the project’s inception in 2011. The country is facing three distinct long-term challenges to its energy system.

  1. The expected growth in energy demand in the coming years is 7-8% annually
  2. The current energy mix leaves Indonesia vulnerable to the price of imported oil due to subsidies, and
  3. The country has committed to substantially reducing its greenhouse gas emissions relative to business as usual.

Small and medium scale renewable energy projects (<10 MWe) are expected to play a key role in meeting these challenges. The government of Indonesia seeks to scale up such projects by 3 GW in 2020 - almost of quarter of total capacity growth. Although an existing feed-in tariff and complementary set of fiscal measures provide a strong pull for this segment, there are very few projects that have successfully been financed and constructed. Together with government and private stakeholders, the Mitigation Momentum project has developed a concept for a supported NAMA for small and medium scale renewable energy projects. The NAMA seeks to increase investment in such projects by stimulating lending from Indonesian financial institutions to the private sector.

Lending to independent power producers (IPPs) will be encouraged through a mixture of financial mechanisms and technical support. The NAMA consists of a primary financial mechanism (currently targeting a partial credit guarantee) along with components related to: i) early stage grants/loans for pre-feasibility studies, ii) compensation for IPPs that experience grid downtime/ constraints, iii) capacity building and training, and iv) establishment of IPP targeted services within the ministry’s so-called ‘EBTKE Clearing House’ to offer technical assistance and central coordination to the sector.

The workplan for 2015 calls for a more detailed plan for implementation and alignment with other support efforts; detailing the financial instruments; exploring alliances with potential sponsors and implementing organisations; and securing implementation finance for the first phase.

Policy Brief - Rationale for small scale IPPs in Indonesia - March 2016

Policy Brief - Barriers for small scale IPPs in Indonesia - March 2016

Policy Brief - Promoting small and medium scale renewables in Indonesia - March 2016

NAMA concept for small and medium scale renewable energy generation in Indonesia - March 2014

Mitigation Momentum Flyer Indonesia - Nov 2013